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Score One for Norquist, GOP on 529 College Savings Accounts

Norquist got what he wanted Tuesday. (Tom Williams/CQ Roll Call File Photo)
Norquist got what he wanted Tuesday. (Tom Williams/CQ Roll Call File Photo)

Somewhere, Grover Norquist is happily tweeting over his latest victory.  

The anti-tax president of Americans for Tax Reform had been waging war on President Barack Obama’s latest plan to tax 529 college savings accounts as part of his larger proposal to restructure and increase college aid. The tax-advantaged college savings accounts are used by fewer than 3 percent of Americans and the administration said they tended to benefit the wealthy. Obama’s proposals — such as free community college — are aimed lower down the income scale.  

But the idea of taxing anything that is used by the middle class became a problem for Capitol Hill Democrats. House Minority Leader Nancy Pelosi of California pressed top administration officials against it, according to a source familiar with the situation.  

It also was tripping up the White House’s broader message of “middle class economics.”  

By late Tuesday, the White House was sending up the white flag of surrender, via a White House official:

“The 529 provision is a very small component of the President’s overall plan to deliver $50 billion in education tax cuts for middle class families. We proposed it because we thought it was a sensible approach, part of consolidating 6 programs to 2 and expanding and better targeting education tax relief for the middle class. Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President’s broader package of tax relief for childcare and working families, paid for by eliminating the trust fund loophole and making sure the wealthy pay their fair share.”

As for Norquist, he tweeted:

Norquist’s group had found numerous occasions where the Obama administration was on record touting the 529 plans.  

Speaker John A. Boehner, R-Ohio, also put out a victory statement.

“I’m glad President Obama has decided to listen to the American people and withdraw his tax hike on college savings. This tax would have hurt middle-class families already struggling to get ahead. I urge President Obama to support Rep. Lynn Jenkins’ bipartisan bill to expand, not tax 529 college savings plans. This is also an opportunity for the president to reconsider his threats to veto common-sense jobs bills, like the Keystone XL pipeline and restoring the 40-hour workweek. Together, by listening to the people, we can get our economy moving, create jobs, and help give our children the best opportunities to succeed.”

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